Housing crisis
Rent freeze may stall £3.5bn of investment
Those desperately seeking rented accommodation in Scotland may be forced to wait even longer amid a claim that the new rent freeze could deter as much as £3.5 billion of investment in the sector.
An Emergency bill has been introduced to prevent rents rising and to suspend evictions until at least 31 March.
Ministers say it will help tenants cope with rising energy and food bills and avoid them being thrown on the streets for being unable to pay their rent.
But the industry claims the rent freeze will make matters worse by forcing landlords to sell up or not enter the market, thereby limiting the supply of stock. They say the best way to reduce rents is to encourage, not discourage, more supply.
David Melhuish, director of the Scottish Property Federation, said: “Scotland faces a chronic undersupply of rental housing across both public, private and student accommodation sectors, and this emergency legislation will make this situation much worse.
“There is a pipeline of new rented private accommodation estimated to be £3.5bn earmarked for Scotland. This could deliver thousands of new high-quality and energy efficient homes for renters.
“We fear this legislation will now undermine the likelihood of many of these complex and capital-intensive projects actually being delivered any time soon.”
The Cost of Living (Tenant Protection) (Scotland) Bill will be led through the Scottish Parliament by Scottish Greens co-leader and Tenants Rights Minister, Patrick Harvie.
Ariane Burgess, housing spokesperson for the Scottish Greens, said that over the course of this parliamentary term there will be the biggest expansion of tenants rights since devolution, including better rights and protections and rent controls.
There is scope in the Bill allowing landlords to apply to raise rents by up to 3% in certain circumstances.
But Mr Melhuish joined others in the industry expressing frustration at government policy towards housing. Jane Wood, new CEO of Homes for Scotland, told Daily Business last month that housing does not get proper attention in government policy .
She said some builders anticipate reducing their affordable housing activity and warned that investors would be deterred from entering the rental sector if there was a prolonged rent freeze.
When the First Minister Nicola Sturgeon announced the freeze in her Programme for Government, the Scottish Property Federation warned that at least one large scale investment could be paused.
Now it says funds running into billions may be held up just as tenants are struggling with an already short supply of accommodation.
Mr Melhuish said: “Housing providers are not responsible for the cost-of-living crisis but have been singled out by the Scottish Government’s proposals that miss the critical need to attract new investment to the sector.
“The only way that pressure will be reduced on the rented sector in Scotland is by increasing the supply of new, well maintained and energy efficient homes for rent.
“New housing must become the policy priority, not blunt instruments singling out landlords, many of whom work hard to support their tenants.
“We call on the Scottish Government to recognise the vital contribution that the rented sector makes to communities across Scotland and to support those that are looking to fund and develop new homes here.
“Support must now be offered to housing providers affected by any withdrawal of rent resulting from the proposed moratorium, they too are impacted by the upwards pressure on costs and rising interest rates.”
John Blackwood, chief executive of the Scottish Association of Landlords (SAL), said: “With this Bill, the SNP and Greens have put political rhetoric ahead of measures that would achieve real results in solving Scotland’s housing crisis.
“They have neglected the housing sector in Scotland, leaving it to crumble. Those needing a home shout for help but no-one answers. Big promises of improvements never materialise. All the while, costs rise unchecked.
“By approaching this problem in a political way rather than as a serious policy discussion, the SNP and Greens have already caused investment to halt, with fewer homes available and people struggling to find somewhere to live. That is irresponsible whichever way you look at it.”
“We know the SNP and Greens will ram this Bill through but that will only result in poor law. We can already see it is full of holes and may well be open to legal challenge, particularly around protection of private property and ownership.”
“And for what? Cheap political headlines at the expense of actual solutions. Solutions that could have increased investment and the supply of housing while keeping rent levels affordable.
“The consequences of that lie firmly at the door of the SNP and Greens and their irresponsible approach to a housing crisis they have created.”
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What’s better than rent control? A tax on vacant lots and unoccupied buildings. While rent control makes it less attractive to supply accommodation, a vacant-property tax makes it less attractive NOT to!
Now here’s the kicker: If you’re a commercial property investor, a vacant-property tax in nearby residential areas RAISES the value of your property by keeping it supplied with prospective customers and workers. Moreover, the desired *avoidance* of the vacant-property tax would initiate economic activity, expanding the bases of other taxes and allowing their rates to be reduced, so the rest of us—including business operators, and landlords with tenants—would pay LESS tax!